CLWM4100 Taxation Law

Assignment – CLWM4100 Taxation Law – Trimester 2 2018

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Subject Code: CLWM4100

Subject Name: Taxation Law

Assessment Title: Individual case study assignment

Weighting: 20%

Due Date: Sunday 11.30pm AEST of week 9

ASSIGNMENT ASSESSMENT 3 I N F O R M A T I O N

This case study must be presented as an individual effort. The case study requires individual

research using a range of tax resources. It is expected the student will survey the relevant

literature, including decided cases, and select appropriate additional resources.

The case study is designed to incorporate uncertainty. The student is expected to develop a

piece of work which is written advice for their client. It must therefore identify the facts and

issues presented by each aspect of the case study, identify and apply the relevant legislation

and/or case law, come to a conclusion and make a recommendation as to the most appropriate

application of the relevant law to the circumstances to the client.

This assessment assesses your research skills, your ability to synthesise an original piece of work

to specific content requirements and your ability to produce a comprehensible piece of advice

which addresses the client’s needs.

It also assesses your written communication skills. The ability to deliver a brief is an essential skill

in the workplace. Clients may well approach advisors seeking a combination of specific

information needs and advice on the tax implications of a particular arrangement in the

Australian tax jurisdiction. It is therefore important to be able to identify all the issues presented

by an arrangement and to think about the potential consequences of different approaches to

addressing the client’s needs. Your case study is not just a list of answers. Your reasons for your

conclusions and recommendations must be based on your research into the relevant cases and

legislation.

Assignment – CLWM4100 Taxation Law – Trimester 2 2018

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Elwood Blues is an Australian resident for tax purposes and one of your best clients. Elwood has a

varied portfolio and usually has a number of interesting questions to ask about the tax implications of

various undertakings he has been involved in. This year is no different, Elwood has the following

questions and he requires your analysis and advice as to the application of the law

Part 1- Starting a new business

Elwood has started a new business venture. He has started an international shipping company based in

Singapore. There are 4 directors:

• Two are located in Singapore

• One is located in Monaco, and

• Elwood.

All the director’s meetings are held in Singapore and the annual general meeting is held in Monaco.

The company’s main business is shipping containers between Sydney and Africa, via Singapore. The

contracts are signed in Sydney on behalf of the company by Elwood.

The company has a rotating Managing Director with the role changing every three months between the

directors. The shares are held only by the directors and are held in equal proportion.

Elwood would like to know:

Is the company a resident of Australia for tax purposes?

Part 2 – Sale of assets

Elwood has sold the following items

1. A car he bought 3 years ago for $65 000 and was used solely for his personal use was sold for

$25 000. The book value of the car is $27500

2. Vacant land sold in June 2018 for $200,000 that had been bought by him on 21/3/1984 for

$20,000. This is being paid in 10 instalments of $20 000, however the purchaser has declared

bankruptcy and the last two instalments due next financial year will not be paid.

3. 10,000 shares in ABC Ltd sold in February 2017 for a total sale price of $175,000. Elwood bought

all the shares for long term investment purposes during November and December 1994 at a total

cost of $80,000.

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4. An antique sold on 1 May 2018 for $15,000. Elwood bought the antique on 31 December 1989 at

a cost of $5,000 for personal reasons.

5. Jewellery sold in July 2017 for $5,000. The jewellery was purchased for 29/09/09 for $20,000.

6. Shares in XYZ Ltd were sold on 1/10/2017 for $45000. These shares were purchased for long

term investment purposes on 31/10/1998 for $41500.

7. Elwood has interests in many businesses. One particular business is a clothing store. This store

imports a lot of clothing from overseas and is entitled to a concessional rate on the customs duty

for a quota (a particular quantity) of protective clothing. However, this protective clothing was

not selling well so Elwood sold the quota to another business for $50 000. The value of the quota

at purchase 5 years ago was $25 000. Elwood also has to pay an annual fee of $5000 to renew

the quota.

Advise Elwood as to the tax implications of each of these disposals and calculate any amounts required

to be declared in his tax return.

Part 3 General deductions

Elwood is keenly promoting a car made in Fiji which runs on overproof alcohol. However, the Federal

Government has decided this is undesirable and has imposed a new, strict limit on the number of cars

which can be imported. Elwood is Fijian and is hopping mad about this. He has launched a media

campaign, costing $175 000, attacking this restriction and demanding its removal claiming it is an unfair

restriction on his business structure and is undermining freedom of product choice.

Elwood has borrowed a significant amount of money to set up the structure to import the cars, buy and

fit out showrooms and provide the after sales support for the cars.

Elwood wishes to know whether the:

• interest on the loan, amounting to $250 000, will be deductible. He took the loan out after

confirmation from both governments the importation could go ahead, however he did not have

a showroom at this time. He acquired the showroom before the first cars arrived.

• costs of the media campaign are deductible.

Please advise Elwood

Assignment – CLWM4100 Taxation Law – Trimester 2 2018

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OTHER IMPORTANT INFORMATION

Required:

This assignment is to be completed by individual students. All questions, must be attempted.

The assignment must be submitted before the above due date to avoid any late penalties. Please

make sure you follow the usual assignment presentation guidelines especially those relating to

presentation of written work, late policy and academic integrity.

Please note that a word limit exists for all questions. Submissions that exceed the word count

(50 words per question) by more than 10% will cease to be marked from the point at which that

limit is exceeded.

Submission:

The assignment will need to be submitted electronically through the student portal – use the

link under “Assessments” to submit the information.

Referencing:

Any sources that you use need to be acknowledged in order to avoid plagiarism. Information

on referencing can be found in the Guidelines for Referencing and Presentation at the Kaplan

website.

In-Text Referencing and the Reference List:

Sources of information must be cited both in the body of the text (in-text referencing) and the

end of the assignment (reference list). Failure to do so will result in penalties. Any documents

or books or other references you use will require referencing.

Penalties Regarding Referencing:

No in-text referencing – deduct 1 marks

Some in-text referencing only – deduct 1 mark

No reference list – deduct 2 marks

Incomplete reference list – deduct 1 mark

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Assignment – CLWM4100 Taxation Law – Trimester 2 2018

Individual case study marking rubric

Student Name: Student Number:

Criterion Rating

Research – 15%

• Ability to locate and effectively use relevant resources

Poor

(0-1)

Adequate

(2)

Average

(3)

Good

(4)

Outstanding

(5)

Application of law to facts 70%

• Ability to identify relevant facts

• Ability to relate appropriate law to the facts

• Ability to draw correct or defensible conclusions as to the application of the

law to the facts

Evidence of effective communication skills:15%

• Piece is constructed in a logical manner showing development of arguments

• Piece is concise and easy to understand

• Calculations are correct

Student average mark across three domains out of 20 =

Teacher Name

___________________________________________

__

Teacher Signature

_______________________________